Modern Monetary Theory: the post-Crisis economy misunderstood?

Chunping Liu, A. Patrick Minford and Zhirong Ou

No 17501, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We set out Modern Monetary Theory (MMT) as a full DSGE model, and test it by indirect inference on post Financial Crisis US data, alongside a standard New Keynesian, NK, model. The MMT model is rejected, while the NK model has a high probability. We then evaluate replacing the fiscal and monetary policies within the NK model by MMT policies, and find that they imply a material loss of welfare.

Keywords: Modern monetary theory; Dsge model; Fiscal activism; Wald test; indirect inference (search for similar items in EconPapers)
Date: 2022-07
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP17501 (application/pdf)

Related works:
Working Paper: Modern Monetary Theory: the post-Crisis economy misunderstood? (2022)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:17501

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP17501

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().